Risk Management Statewide Insurance Seminar State of Oklahoma

1
Risk Management Statewide Insurance
SeminarState of Oklahoma

• February 10, 2010

2

• Directors and Officers Liability
• Employment Practices Liability
• Educators Legal Liability

3

• Directors and Officers Liability (DO)

• Covers State of Oklahoma (Including its
  Agencies), Directors, Officers,
• Trustees, Employees and Volunteers
• 5MM per Claim
• 35MM Aggregate limit of liability with tie-in
  of limits between DO and
• ELL policy
• Retention per claim per State entity based on
  election, with State Risk
• Management paying the difference for a total
  retention of 500,000
• Coverage not provided for Defense Costs

q\finpro\dointro.pre
4
DO Basic Coverage Overview

• Elements of Coverage for DO
• Provides coverage to Directors and Officers in
  the event of allegations citing errors, omissions
  or breach of duty within the scope of their
  duties
• Provides coverage to State of Oklahoma for
  reimbursement of indemnified amounts
• Provides entity coverage to the State of OK
• Coverage is extended to include Employment
  Practices Allegations

5
DO Key Policy Definitions

• Insured(s), or Director, or Officer or Trustee
  means
• Any past, present or future duly elected or
  appointed directors, officers or trustees and
  employees of the Organization. Coverage will
  automatically apply to all new directors,
  officers, trustees and employees after the
  inception date of this policy
• The Organization - (State of Oklahoma, including
  its Agencies)

6
DO Key Policy Definitions

• Definition of Loss includes
• Damages, judgments, and settlements
• Definition of Loss does NOT include
• defense costs,
• civil or criminal fines or penalties imposed by
  law,
• punitive or exemplary damages, the multiplied
  portion of multiplied damages,
• taxes,
• any amount for which the Insureds are not
  financially liable, or which are without legal
  recourse to the Insureds,
• or matters which may be deemed uninsurable under
  the law pursuant to which this policy shall be
  construed.

7
DO Key Policy Definitions

• Wrongful Act means
• Any breach of duty, neglect, error, misstatement,
  misleading statement, omission or act by the
  Directors or Officers or Trustees or Insured of
  the Organization, or the Organization itself, or
  any matter claimed against the Directors or
  Officers or Trustees or Insureds, solely by
  reason of their status in such capacity.
• Wrongful act shall also include
• Discrimination,
• Sexual Harassment,
• Libel,
• Slander,
• Defamation,
• Employment Practices Allegation

8
DO Key Policy Exclusions

• Claims covered under the Governmental Tort Claims
  Act
• Unlawful Gain or Profit
• Criminal Misconduct
• Deliberately Fraudulent Acts
• Insured vs. Insured
• Bodily Injury or Property Damage
• Medical Malpractice
• Sexual Misconduct Child Abuse
• Contractual Liability
• Employee Retirement Income Security Act (ERISA)
• Fair Labor Standards Act (FLSA)
• National Labor Relations Act (NLRA)
• Consolidated Omnibus Budget Reconciliation Act
  (COBRA)
• Worker Adjustment and Retraining Notification Act
  (WARN)
• Occupational Safety and Health Administration
  (OSHA)
• Absolute Wrongful Imprisonment Exclusion
• Absolute Affirmative Action Exclusion
• Pollution

9
Educators Legal Liability (ELL)

• Covers State of Oklahoma Universities, Colleges,
  and Board of Regents
• 5MM per Claim
• 35MM Aggregate limit of liability with tie-in of
  limits between DO and ELL policy
• Retention per claim per State entity based on
  election, with State Risk Management paying the
  difference for a total retention of 500,000
• Coverage not provided for Defense Costs

10
ELL Basic Coverage Overview

• Elements of Coverage for Educators Legal
  Liability
• Provides coverage to Directors and Officers in
  the event of allegations citing errors, omissions
  or breach of duty within the scope of their
  duties
• Provides coverage for non-indemnifiable events
• Provides coverage to State of Oklahoma for
  reimbursement of indemnified amounts
• Provides entity coverage to the State of OK and
  Colleges, Universities, and Board of Regents
• Coverage is extended to include Employment
  Practices Allegations

11
ELL Key Policy Definitions

• Insured(s), or Director, or Officer or Trustee
  means
• Any past, present or future duly elected or
  appointed directors, officers or trustees and
  employees of the Organization. Coverage will
  automatically apply to all new directors,
  officers, trustees and employees after the
  inception date of this policy
• Student Teachers, Faculty Aides, Students in
  Supervised Internships, Teaching Assistant,
  President, Regent, Chancellor, Provost, Risk
  Manager, and Volunteers
• The Organization (State of Oklahoma and scheduled
  Colleges, Universities and Board of Regents)

12
ELL Key Policy Definitions

• Definition of Loss includes
• Damages, judgments, and settlements
• Definition of Loss does NOT include
• defense costs,
• civil or criminal fines or penalties imposed by
  law,
• punitive or exemplary damages, the multiplied
  portion of multiplied damages,
• taxes,
• any amount for which the Insureds are not
  financially liable, or which are without legal
  recourse to the Insureds,
• matters which may be deemed uninsurable under
  the law pursuant to which this policy shall be
  construed.

13
ELL Key Policy Definitions

• Wrongful Act means
• Any breach of duty, neglect, error,
  misstatement, misleading statement, omission or
  act by the Directors or Officers or Trustees or
  Insured of the Organization, or the Organization
  itself, or any matter claimed against the
  Directors or Officers or Trustees or Insureds,
  solely by reason of their status in such
  capacity.
• Wrongful act shall also include
• Discrimination
• Sexual Harassment
• Libel
• Slander
• Defamation
• Employment Practices Allegation

14
ELL Key Policy Definitions

• Wrongful act shall also include
• Educational Malpractice,
• Denial/Removal of Tenure,
• Failure to Educate,
• Negligent Academic Guidance/Counseling,
• Defect in the Tenure or Peer Review Process
• Failure to grant tenure
• Non-employment discrimination
• Plagiarism

15
ELL Exclusions

• Claims covered under the Governmental Tort Claims
  Act
• Unlawful Gain or Profit
• Criminal Misconduct
• Deliberately Fraudulent Acts
• Insured vs. Insured
• Bodily Injury or Property Damage
• Medical Malpractice
• Sexual Misconduct Child Abuse
• Contractual Liability
• Employee Retirement Income Security Act (ERISA)
• Fair Labor Standards Act (FLSA)
• National Labor Relations Act (NLRA)
• Consolidated Omnibus Budget Reconciliation Act
  (COBRA)
• Worker Adjustment and Retraining Notification Act
  (WARN)
• Occupational Safety and Health Administration
  (OSHA)

16
Employment Practices Liability Extension

• Applies to both, Directors and Officers and
  Educators Legal Liability policy
• EEOC continues to dedicate more resources and
  take an aggressive stance in claim investigation
  and settlement negotiations through 2009
• The frequency and severity of EEOC claims are on
  the rise
• The EEOC appears to be shifting its focus from
  individual cases and is more aggressively
  pursuing class action cases
• Charges of race discrimination filed with the
  EEOC continue in 2009 to be the most prevalent
  type of claim filed
• EEOC reporting at the first knowledge or
  Notice of Charge to Risk Management for reporting
  under policies to protect coverage is critical

17
DO and ELL Notice / Claim Reporting Provisions

• Claim Reporting Provisions
• If a Department Manager, the Human Resources
  Manager, Attorney Generals Office or General
  Counsel becomes aware of a claim or circumstance
  that could give rise to a Claim, they should
  notify State Risk Management immediately of the
  claim and/or circumstances.
• The Claim or Report of circumstances should
  include full details as to dates, persons and/or
  entities involved, along with the demand letter,
  a copy of the lawsuit, or a brief description of
  the allegations.

18
DO and ELL Notice / Claim Reporting Provisions

• State Risk Management will either give written
  notification of claim/circumstance to the
  insurance company directly through monthly
  bordereau reports or on an individual claim
  basis, depending upon the circumstances of the
  claim. Upon receipt the insurer will acknowledge
  receipt and assign the bordereau report a claim
  number.
• Marsh will assist, as requested, in the claim
  management or claim settlement process.

19
DO and ELL Notice / Claim Reporting Provisions

• The DO and ELL policies require approval of
  defense counsel by the insurer. Therefore, if
  outside counsel is used to defend claim please
  report the identify and contact information to
  State Risk Management immediately. SRM will
  report to the insurance company to obtain its
  consent. Outside counsel shall submit
  credentialing documents on to SRM as requested by
  the insurance company.
• Defense counsel shall submit, pursuant to SRMs
  promulgated rules, a monthly claim status report
  to State Risk Management or more often if major
  developments occurs. The format of these reports
  is available from SRM.
• Pursuant to the insurance policy, SRM is the
  liaison between the insurer and defense counsel.
  The insurer is not to contact defense counsel
  directly and vice a versa.

20
DO and ELL Notice / Claim Reporting Provisions

• State Risk Management will coordinate initial
  contact with defense counsel and the insurer.
  Requests by the insurance company and/or local
  counsel for additional information related to
  open claims shall be directed to State Risk
  Management.
• State Risk Management will notify the insurance
  company of any change in defense counsel on open
  claims.

21
DO and ELL Notice / Claim Reporting Provisions

• Settlement Conferences
• Upon receipt of notice of a conference the same
  notification requirements to Risk Management
  apply as stated above, however the insurance
  company will
• Assign a claim file number
• Confirm the receipt of the Claim or circumstance
  in writing to State of Oklahoma Risk Management
  Division and Marsh USA, Inc.
• Issue a coverage opinion letter outlining the
  policy provisions based on the preliminary known
  facts of the reported Claim. This letter will be
  directed to State Risk Management for their
  review of coverage determination by insurer.

22
DO and ELL Settlements and Judgments

• Consent Clause The Insureds shall not admit or
  assume any liability, enter into any settlement
  agreement or stipulate to any judgment without
  the prior written consent of the Insurer
• Cooperation Clause The insurer shall have the
  right to effectively associate with the Insureds
  in the defense of any Claim that appears
  reasonably likely to involve the Insurer,
  including but not limited to negotiating a
  settlement. The Insureds shall give the Insurer
  full cooperation and such information as it may
  reasonably require
• If Insureds fail to cooperate or do not consent
  to an early settlement opportunity the Insureds
  may have jeopardized their coverage under the
  policy or limited the amount of coverage
  available to the amount the claim could have been
  settled for earlier. Per the promulgated rules,
  SRM is to involved in all settlement
  negotiations.
• If Insureds settle a claim without first
  notifying State Risk Management, they may have
  jeopardized this coverage.

23

• Public Employee Dishonesty

24
Public Employee Dishonesty

• Employee Theft Coverage Per Employee Coverage
• Pays for loss of or damage to money, securities,
  and other property resulting directly from theft
  committed by each employee, whether identified or
  not, acting alone or in collusion with other
  persons. Also pays for loss or damage to money,
  securities, and other property resulting directly
  from the failure or any employee to faithfully
  perform his or her duties as prescribed by law,
  when such failure has as its direct and immediate
  result a loss of your covered property
• Fulfills bond requirements as stated in the
  Oklahoma Statute Title 74 O.S. 85.29 (Schedule
  of Amounts of Surety Required)
• 50,000 Limit per Employee all State Departments,
  Agencies, Institutions, Commissions, Authorities
  and other Bodies of Govt.
• 1,000,000 Computer Fraud pays for loss or
  damage to money, securities or other property
  resulting from the use of any computer to
  fraudulently cause a transfer of that property
  from inside the Insured premises or banking
  premises to a person outside the remises or to a
  place outside the premises.
• 5,000,000 Funds Transfer Fraud pays for loss
  of funds resulting directly from a fraudulent
  instruction directing a financial institution to
  transfer, pay or deliver funds from your
  transfer account.
• 5,000 Deductible per Occurrence

25
Public Employee Dishonesty

• Duties in the Event of Loss
• After you discover a situation that may result
  in loss of or damage to money, securities or
  other property you must
• Notify State Risk Management as soon as
  possible
• Submit to examination under oath if requested
  and give a signed statement of your
  answers
• Provide a detailed, sworn proof of loss within
  120 days
• Cooperate in the investigation of any claim.

26

• Property

27
Property Coverage FY 2010

• Covers loss or damage to property reported to
  Risk Management
• 1,000,000,000 Loss Limit per Occurrence
• Deductible varies by agency
• Applicable sublimits
• 150,000,000 Loss of Income (limited to those
  agencies reporting values)
• 10,000,000 Loss of Income for agencies not
  reporting values
• 15,000,000 Tuition and Fees (limited to values
  reported by specific agencies)
• 5,000,000 Tuition and Fees for agencies not
  reporting values
• 250,000,000 Each Occurrence and Annual Aggregate
  Earth Movement

28
Property Coverage FY 2010

• Sublimits - continued
• 250,000,000 Each Occurrence and Annual Aggregate
  Flood except
• 100,000,000 Each Occurrence and Annual Aggregate
  Flood for Properties located in the 100 Year
  Flood Zone as defined by FEMA
• 100,000,000 Any One Accident Equipment
  Breakdown
• 20,000,000 Debris Removal or 25 of the loss
  whichever is greater

29
Property Coverage FY 2010

• Sublimits - continued
• 25,000,000 Expediting Expense
• 50,000,000 Errors and Omissions
• 2,500,000 Plants, Trees, Shrubs
• 5,000,000 Fungus Clean-Up or Removal Extra
  Expense (Annual Aggregate)
• 1,000,000 Asbestos Clean-Up or Removal Extra
  Expense (Annual Aggregate)

30
Property Coverage FY 2010

• Exclusions
• Aircraft, watercraft, satellites, and motor
  vehicles licensed for road use
• Electronic Data Limitation
• Electronic Data Recognition Exclusion
• Fungi Exclusion (mold)
• Growing Crops or Drying Crops
• Money and Securities
• Spacecraft launch vehicles, launch sites, and
  components
• Underground mines, caverns, tunnels and any
  property contained therein, except this exclusion
  does not apply to pedestrian tunnels and walkways
  or the following items per schedule on file
  waterlines, sewer lines, fiber optic lines,
  electrical lines or cable lines whether above or
  below the ground

31
Property Coverage FY 2010

• Claim Reporting
• Report any and all claims to Risk Management
  immediately whether or not you believe it will
  exceed your deductible.

32

• Fine Arts

33
Fine Arts Policy FY 2010

• Covers fine arts and collectible objects of every
  description including but not limited to
  paintings, drawings, prints, rare books and
  manuscripts, rugs, tapestries, etchings,
  photographs, numismatic objects, jewelry,
  sculpture, ceramics, video artwork and other
  bonafide works of art, or rarity, historic value,
  or artistic merit reported to State Risk
  Management.
• Limits
• 750,000,000 Any one Event except
• 1,000,000,000 Bizzell Library
• 50,000,000 Unnamed Location Limit Domestic
• 50,000,000 Unnamed Location Limit
  International
• 10,000,000 Transit Limit Worldwide
• 100,000,000 Certified Terrorism
• 100,000,000 Working Libraries (Library Books)
• Deductible Nil

34

• Additional Coverage Available
• through
• State Risk Management

35
Additional Coverage Available Through SRM

• Auto Physical Damage Coverage
• Provides for risk of direct physical loss or
  damage to scheduled state owned private passenger
  vehicles, buses, trailers, and equipment.
• Deductible
• 3 of vehicle value, subject to a minimum of
  2,500 and maximum of 5,000 for vehicles valued
  at 25,000 and less
• 5 of vehicle value, subject to a minimum of
  5,000 for vehicles valued at 25,001 and over
• 50,000 per Occurrence Aggregate applies to wind
  and/or hail (including tornado).
• Valuation
• Replacement cost for vehicle models less than 10
  years
• Actual Cash Value for all vehicle models 10 years
  and older

36
Other Coverage Available through SRM

• Public Entity General Liability and Automobile
  Liability for State employees while traveling
  outside of the state of Oklahoma for business
  purposes
• Foreign General Liability, Automobile Liability,
  Employers Responsibility Coverage, Accidental
  Death and Dismemberment and Executive Assistance
  Services for State employees while traveling
  overseas for business purposes
• Condition No more than 5 employees may travel
  together on the same flight.
• Aircraft Hull and Liability for State owned
  aircraft
• Please contact Risk Management for additional
  information.

37
Questions

• When the lines are opened, all participants will
  be able to hear your internal discussions
• Please speak one at a time and state
• Your name
• Your position
• Your agency or higher education entity
• Your question